The increase will come into effect from 1st April 2023 and will affect both gas and electricity customers.
British Gas has said that the increase is necessary to cover the rising costs of wholesale energy, which have been driven up by factors such as the war in Ukraine and the global energy crisis.
The announcement has been met with criticism from consumer groups, who say that it will add to the financial burden on households that are already struggling with the cost of living crisis.
Citizens Advice has said that the increase is "a bitter blow for households already facing a cost of living crisis."
The charity said that the increase will "push more people into fuel poverty and make it harder for them to keep their homes warm this winter."
The increase in prices comes at a time when the UK is facing record levels of inflation, which is putting pressure on household budgets.
The Bank of England has warned that inflation could reach 10% this year, which would be the highest level in 40 years.
The combination of rising prices and falling incomes is likely to lead to a significant increase in the number of households that are struggling to make ends meet.
The government has said that it is "committed to supporting households with the cost of living crisis" and has introduced a number of measures to help people with their energy bills.
These measures include the Energy Price Guarantee, which will limit the amount that households can be charged for their energy use, and the Energy Bills Support Scheme, which will provide a one-off payment of £400 to help people with their bills.
However, consumer groups say that more needs to be done to help households with the rising cost of living.
Citizens Advice has called on the government to "urgently bring forward a package of support for households struggling with the cost of living crisis."